Google Traffic Down. 7 Solutions From 11 Years of Selling Media Companies.
Songbird.Group M&A will stop taking on new "content + Google traffic" businesses as they've become high-risk liabilities. Rob Toth explains how publishers can increase their exit valuations.
After nearly 11 years of representing top publishers for strategic exits, we’ve made the internal decision that as of mid-year (July 1), Songbird.Group will no longer onboard any new “content + Google traffic” businesses.
In the past decade, we had the opportunity to work on and close deals such as MetalInjection to Sony, DualShockers to GRV, BloopAnimation to MagicStudios, and CampAddict to an RV water filter brand.
This 10-year deep-dive into the buy-and-sell world of media has provided us with a unique vantage point. We published an industry report in June 2023 that received ‘Chicken Little’ responses from most; the core theme of the report is what is now broadly discussed as the zero-click era.
Where are we now?
These quotes sum it up:
“[We have] No appetite for buying more sites in a market where Google is clearly killing the open web.” - UK-based publisher, former buyer of one of our clients’ properties.
“We’re not looking at any SEO-driven media businesses.” - M&A deals team at a 9-figure media portfolio.
Currently we have visibility into over 40 Google Analytics accounts across current clients and recent businesses we were tasked with building a valuation for.
100% of those GA accounts are downtrending.
One hundred percent.
Yes, good deals are happening in our Dealbook as well. And there are acquisitions like OpenAI’s purchase of the TBPN YouTube channel for an outrageous number. Or Alpha Compute’s recent acquisition of GAMEE for a reported 5x revenue at $18M.
Both of those were for high-value audiences.
The hard reality, though, is that organic Google traffic is no longer viewed as an asset to pay a premium for; it’s now a liability to discount the valuation.
What, then, does a path forward look like?
7 Ways To Grow Revenues and Exit Valuations
1. Licensing
Content syndication licence fees are a supplementary revenue boost requiring no new work. While historically the fear might have been that content licensing could cannibalise ad views from Google traffic, Google itself is already doing this. Instead, licensing provides a new, stable income stream. For one crypto media client, it’s not insignificant as the revenues from licence fees are a double-digit percentage in their P&L.
2. Partial-equity growth partners
Changing the business model requires capital and often new skills. This comes with a financial investment that most publishers simply no longer have. Enter the growth partner. This isn’t just about capital. It’s the same profile as a Strategic Acquirer but they minimise their own risk by taking a smaller part of your business and they are tied to the upside by helping you expand the brand to new revenue models.
3. Content agency
This is one of the fastest paths to boosted revenue. The same editorial and writing team and content creation practices shift into contractual relationships with strategic brands that go beyond just a sponsored article.
4. Owned audience
Moving away from Google dependency is an understandable must. So is owning more of that audience such as with a newsletter. One client in the animation industry space had an ignored “sign up for our content” form. By optimising and rebuilding, this became an active 65,000-subscriber list and introduced a new $4,000/month in revenue. We didn’t have a chance to optimise as we sold their business two months later.
5. Events
Brilliant media companies such as CzechCrunch spun out an event business from their own brand and audience that far outpaces their advertising earnings. Meanwhile, Vivienne Tang of DestinationDeluxe built out an annual industry awards event that is now a central part of their operation in revenue and exposure.
Digital events also win. Vanessa of Pre-KPages relaunched their Soar To Success Summit, a virtual event for pre-K educators. It’s a central part of their brand visibility and membership sign-ups.
6. Memberships
In our M&A firm and agency, we’re very bullish on niche, digital memberships as community development. For a media business, with readers centred around a subject matter, this is a hand-in-glove, low or no investment option.
A membership changes the conversation entirely. It gives the media business an owned audience instead of a revolving door of webpage visits and it adds a consistent cash flow stream to the business.
A membership is like an insurance policy and safety net for a buyer. It’s owned audience. And it’s on par with one of today’s biggest trends: community.
What can this look like?
- Pre-K educators gather at “Teaching Trailblazers”.
- Writers connect with peers at “The Freelance Writers Den”.
- Registered nurses network about their demanding profession at “Fresh RN”.
- Crypto investors in France connect at Cryptoast Academy.
7. Hold for passive
There is also the do-nothing route. Assuming it’s a tactical decision, just winding down expenses and holding for the passive revenue may be a legitimate option.
Hot Take
Publishers need to be honest about the technology shift we’re in. To immediately rectify revenues and potentially capitalise with a meaningful exit, firm changes are needed.
Rob Toth, Founder and CEO, Songbird.Group
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About:
Songbird.Group (SBG) is a team of M&A and business development specialists with 11 years’ experience in media businesses. The company works with owners to “grow then sell” through their agency services. Connect with the team at contact@songbird.group.